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BPA Deal could Hold Line on Rate Spike by Chris Mulick, Herald staff writer Tri-City Herald, April 17, 2004

The Bonneville Power Administration announced a deal Friday to cut and defer payments owed to PacifiCorp and Puget Sound Energy in a move that could head off another rate increase this fall.

The agency, which sells all the power generated at 30 federal dams and the nuclear plant north of Richland, had expected an increase somewhere near 5 percent would be needed Oct. 1.

The deal announced Friday would keep rates about 6 percent lower than they otherwise would be for the next two years.

BPA and other federal agencies also are mulling a plan that would curtail summer spill operations at dams to save a few percentage points more. But BPA Administrator Steve Wright in a press release called the private utility deal "the single greatest action we can take" to keep rates down next year.

Retail ratepayers, after costs are filtered through their utilities, aren't likely to see drastic changes one way or the other this fall.

"I don't think you'll see any great rate reduction but it will help stabilize them," said Benton REA Manager Chuck Dawsey.

The agreement encapsulates part of a larger settlement that was rejected by public utilities in January.

About 70 such utilities sued Bonneville in 2001 arguing the agency gave private utilities more benefits in the last rate- setting process than they are legally entitled to at the expense of the public utilities, who by law are first in line at the BPA trough.

Anticipating their power purchase contracts would be challenged, PacifiCorp and Puget Sound Energy signed them after Bonneville offered the utilities a contingency plan that included $200 million in payments if a lawsuit were filed.

Without a deal that $200 million would be due by Sept. 30, 2006. Under the plan announced Friday, Bonneville will eliminate half the amount and defer the remaining $100 million into the next five-year rate period, which begins Oct. 1, 2006.

In exchange, the private utilities will be guaranteed power sales contracts with terms outlining benefits that are nearly identical to the ones they now enjoy.

Though the agreement will help cut rates, it does not settle the public power lawsuit, which will go forward.

"They get it both ways," said Bonneville spokesman Ed Mosey.

Bonneville is taking comments on the plan through May 14 but the deal, unlike the failed settlement agreement, does not need to be ratified by public utilities to go forward.

"Utilities in general are supporting it as the least of several evils," Dawsey said.

"It's certainly a step in the right direction," said Franklin PUD Manager Jean Ryckman.